By: Steven M. Williams and Carl L. Engel
In September 2019, the Pennsylvania Supreme Court agreed to review the decision in Gregg v. Ameriprise Financial, Inc. under Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (UTPCPL). The issue before the court was whether a company that is sued by a customer under the UTPCPL’s “catch-all” provision is:
- Subject to a “strict liability” standard of culpability, which requires the consumer to show only that the businesses conduct “has the tendency or capacity to deceive,” or
- Instead liable only if the consumer proves that the business either was negligent or acted intentionally.
On February 17, 2021, the court issued a decision that will have a far-reaching impact on businesses.
In Gregg v. Ameriprise Financial, Inc., the Pennsylvania Supreme Court held that the standard applicable to “catch-all” claims under the UTPCPL is “a lesser, more relaxed standard than that for fraudulent or negligent misrepresentation.” The Court stated that the appropriate test is “whether the conduct has the tendency or capacity to deceive.” The Court reasoned that this relaxed standard comports with the plain language of the “catch-all” provision, which bars “engaging in any other fraudulent or deceptive conduct which creates a likelihood of confusion or of misunderstanding.” Specifically, the Court noted that “all that the statute requires the plaintiff to prove is that the acts or practices are capable of being interpreted in a misleading way.”
In other words, businesses are “strictly liable” for violations of the UTPCPL’s “catch-all” provision, and a consumer does not need to establish that a business even knew (or should have known) that its conduct violated the UTPCPL. Rather, a consumer need only show that a business engaged in conduct that could deceive consumers, regardless of whether it was aware of the potential for deception.
The Pennsylvania Supreme Court’s decision in Gregg will have sweeping consequences for businesses across all industries in the Commonwealth. Because the Court has ruled that consumers do not have to prove that negligent or intentional conduct caused them harm, there may be a significant increase in the number of consumer-protection lawsuits filed against Pennsylvania businesses. Following Gregg, defendants in these lawsuits will not be able to defend based upon their lack of knowledge of the allegedly deceptive business practice, as long as the consumer shows that the conduct had the tendency or capacity to deceive. Therefore, it is important that all businesses that operate in the Commonwealth undertake a review of their policies and practices to ensure that they do not inadvertently result in liability under the UTPCPL.